Nowak v. Tak How Investments, Ltd.

• Decision Date: 06 May 1996
• Docket Number: No. 96-1006,96-1006
• Parties: Ralph M. NOWAK, Administrator of the Estate of Sally Ann Nowak, et al., Plaintiffs--Appellees, v. TAK HOW INVESTMENTS, LTD., d/b/a Holiday Inn Crowne Plaza Harbour View, Defendant--Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 708

94 F.3d 708

65 USLW 2145

Ralph M. NOWAK, Administrator of the Estate of Sally Ann Nowak, et al., Plaintiffs--Appellees, v. TAK HOW INVESTMENTS, LTD., d/b/a Holiday Inn Crowne Plaza Harbour View, Defendant--Appellant.

No. 96-1006.

United States Court of Appeals First Circuit.

Heard May 6, 1996.

Decided Aug. 22, 1996.

Rehearing and Suggestion for Rehearing En Banc Denied Sept.

20, 1996.

Alan B. Rubenstein, with whom Robert B. Foster and Rackemann, Sawyer & Brewster, Boston, MA, were on brief, for appellant.

Edward Fegreus, Boston, MA, for appellees.

Before STAHL, Circuit Judge, COFFIN, Senior Circuit Judge, and CUMMINGS, ^* Circuit Judge.

CUMMINGS, Circuit Judge. ¹

A Massachusetts resident who accompanied her husband on a business trip to Hong Kong drowned in their hotel's swimming pool. Plaintiffs later brought this wrongful death diversity action against the Hong Kong corporation that owns the hotel--a corporation that has no place of business outside of Hong Kong. Defendant moved for dismissal, arguing that a Massachusetts court could not exercise personal jurisdiction consistently with due process and, alternatively, that the case should be dismissed on the grounds of forum non conveniens. The district court denied both motions, and we now affirm.

I.

Tak How is a Hong Kong corporation with its only place of business in Hong Kong. Its sole asset is the Holiday Inn Crowne Plaza Harbour View in Hong Kong ("Holiday Inn"), where the accident in this case took place. Tak How has no assets, shareholders, or employees in Massachusetts. Sally Ann Nowak ("Mrs. Nowak") was at all relevant times married to plaintiff Ralph Nowak ("Mr. Nowak") and was the mother of their two children (collectively, the plaintiffs are "the Nowaks"). The Nowaks lived in Marblehead, Massachusetts, and Mr. Nowak was employed by Kiddie Products, Inc., which has its place of business in Avon, Massachusetts. Kiddie Products does extensive business in Hong Kong. As a Preliminary Design Manager in the Marketing Department, Mr. Nowak customarily made two business trips to Hong Kong each year, accompanied by his wife on one of those trips.

Kiddie Products employees had made trips to Hong Kong since at least 1982, but the company's relationship with Tak How and the Holiday Inn began only in 1992. John Colantuone, a vice-president, was one such employee who had travelled to Hong Kong since 1982 and had stayed at various other hotels. Colantuone was acquainted with the Holiday Inn through advertisements on Hong Kong radio in 1983 or 1984, but only decided to stay there in 1992 after becoming dissatisfied with the rates at other hotels. On his first visit, Colantuone met with the Holiday Inn's sales manager to negotiate a corporate discount for Kiddie Products employees. Holiday Inn agreed to the discount and wrote a letter confirming the arrangement based on a minimum number of room nights per year. Marie Burke, Colantuone's administrative assistant, made all hotel reservations for the company's employees. Although Kiddie Products regularly compared rates at other hotels, Burke was told to book all reservations at the Holiday Inn until instructed otherwise. Since 1992, Kiddie Products employees have stayed exclusively at the Holiday Inn.

In June 1993, the Holiday Inn telecopied Colantuone a message announcing new corporate rates and other promotional materials. Burke requested additional information, and the hotel promptly responded. In July 1993, after a series of exchanges by telecopier, Burke sent a reservation request to the Holiday Inn for several employees for September and October 1993. One of the reservations was for Mr. and Mrs. Nowak to arrive on September 16. On September 18, while the Nowaks were registered guests at the hotel, Mrs. Nowak drowned in the hotel swimming pool. The specific facts surrounding her death are not relevant here. It is uncontested that in 1992 and 1993, prior to Mrs. Nowak's death, Tak How advertised the Holiday Inn in certain national and international publications, some of which circulated in Massachusetts. In addition, in February 1993, Tak How sent direct mail solicitations to approximately 15,000 of its previous guests, including previous guests residing in Massachusetts.

The Nowaks filed this wrongful death action in Massachusetts state court in June 1994. Tak How then removed the case to federal district court and filed two motions to dismiss--one for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2) and the other for forum non conveniens. The district court initially denied the motion to dismiss for forum non conveniens, and then, after allowing time for jurisdictional discovery, issued a memorandum and order denying the Rule 12(b)(2) motion. Nowak v. Tak How Inv. Ltd., 899 F.Supp. 25 (D.Mass.1995). The district court granted Tak How's motion for certification of the jurisdictional issue, but this Court denied Tak How's request for a stay of the district court proceeding pending appeal. Nonetheless, believing that a resulting judgment would not be enforceable in Hong Kong, Tak How did not answer the Nowaks' complaint. Accordingly, the district court entered a default judgment against Tak How for $3,128,168.33. Tak How appeals the denial of its Rule 12(b)(2) motion and its motion to dismiss the case for forum non conveniens.

II.

We first review the denial of Tak How's motion to dismiss for lack of personal jurisdiction. The district court employed a prima facie standard in making its determination rather than adjudicating the jurisdictional facts. See Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 145-147 (1st Cir.1995). Both the court's decision to use the prima facie standard and its conclusion under that standard are reviewed de novo. Id. at 147. To begin, we find no error in the district court's choice of the prima facie standard. A full-blown evidentiary hearing was not necessary in this case because the facts were, in all essential respects, undisputed. In such circumstances, the prima facie standard is both appropriate and preferred. Id. at 145; Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675-676 (1st Cir.1992).

The next question is whether the district court reached the proper result. In diversity cases such as this, the district court's personal jurisdiction over a nonresident defendant is governed by the forum state's long-arm statute. Sawtelle v. Farrell, 70 F.3d 1381, 1387 (1st Cir.1995). Under the Massachusetts statute,

[a] court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action in law or equity arising from the person's ... transacting any business in this Commonwealth.

Mass. Gen. Laws Ann. ch. 223A, § 3(a) (1985). The statute imposes constraints on personal jurisdiction that go beyond those imposed by the Constitution. Gray v. O'Brien, 777 F.2d 864, 866 (1st Cir.1985). We must therefore find sufficient contacts between the defendant and the forum state to satisfy both the Massachusetts long-arm statute and the Constitution. Sawtelle, 70 F.3d at 1387.

To satisfy the requirements of the long-arm statute, Section 3(a), the defendant must have transacted business in Massachusetts and the plaintiffs' claim must have arisen from the transaction of business by the defendant. Tatro v. Manor Care, Inc., 416 Mass. 763, 625 N.E.2d 549, 551 (1994). In Tatro, a Massachusetts plaintiff sued a California hotel for injuries sustained in California. The Court concluded that the hotel's solicitation of business from Massachusetts residents satisfied the "transacting any business" requirement of Section 3(a), id. 625 N.E.2d at 551-552, and that the "arising from" requirement was satisfied where, but for the hotel's solicitations and acceptance of reservations, the plaintiff would not have been injured in California. Id. at 554. The factual scenario in the present case is analogous in all essential respects, and we therefore have little difficulty concluding that sufficient contacts exist to satisfy Section 3(a)'s requirements.

Turning to the constitutional restraints, this Court follows a tripartite analysis for determining the existence of specific personal jurisdiction (plaintiffs do not allege general personal jurisdiction):

First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state activities. Second, the defendant's forum-state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's court foreseeable. Third, the exercise of jurisdiction must, in light of the Gestalt factors, be reasonable.

Pritzker v. Yari, 42 F.3d 53, 60-61 (1st Cir.1994) (quoting United Elec. Workers v. 163 Pleasant St. Corp., 960 F.2d 1080, 1089 (1st Cir.1992)), cert. denied, --- U.S. ----, 115 S.Ct. 1959, 131 L.Ed.2d 851.

A. Relatedness

What this Court calls the "relatedness" test is one aspect of demonstrating minimum contacts pursuant to International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95. The other aspect, discussed below, focuses on the deliberateness of the defendant's contacts, or purposeful availment. Tak How's principal argument on appeal is that relatedness requires a proximate cause relationship between its contacts with Massachusetts and the Nowaks' cause of action.

In arguing for a proximate cause relatedness test, Tak How relies on a series of First Circuit cases beginning with Marino v. Hyatt Corp., 793 F.2d 427 (1st Cir.1986). See Crocker v. Hilton Int'l Barbados, Ltd., 976 F.2d 797 (1st Cir.1992); Fournier v. Best Western Treasure Island Resort, 962 F.2d 126 (1st Cir.1992); Pizarro v. Hoteles Concorde Int'l, C.A., 907 F.2d 1256 (1st Cir.1990). In each of these cases, this Court construed the language of a state long-arm statute requiring, as does...